Progressive tax reform in Washington State took a long-awaited and sorely needed step forward this afternoon with the signing of two fiscally responsible bills that will strengthen our common wealth: ESSB 5096, which levies a state capital gains tax on the wealthy, and ESHB 1297, which updates the statute authorizing a Working Families Tax Credit for Washington’s poorest families.
“This important step to rebuild our unfair tax code was taken after years of work, years of dialogue, and thousands of voices calling for this policy,” said Senator June Robinson (D‑38th District: Everett and Snohomish County), the prime sponsor of the legislation. “We’ve heard that people from every part of our state are ready to move toward a healthier, stronger future together, and it’s time for the wealthiest among us to pay their fair share for that future.”
“This capital gains excise tax, along with the Working Families Tax Rebate that we passed earlier this session, will help support working families in every corner of our state,” said Representative Noel Frame (D‑36th District; Seattle), NPI boardmember Gael Tarleton’s successor as Chair of the House Finance Committee.
“By asking the wealthiest among us to share in the responsibility of funding the needs of our communities and putting money back in the pockets of low-income families via a sales tax rebate, these policies are the first steps on the path to balancing our tax code. We’ll continue down that path of tax reform with the ongoing work of the Tax Structure Work Group.”
ESSB 5096 was NPI’s top priority for the 2021 legislative session. It was also the top legislative priority for the Balance Our Tax Code coalition and the Washington State Democratic Party. Since the bill includes a provision stating it is necessary for the support of state government, it is not subject to referendum.
Disgraced initiative promoter Tim Eyman (who owes Washington taxpayers millions of dollars for repeated and willful violations of the FCPA) sought to test whether the Secretary of State would permit referendum filings on the bill last week. He got his answer when elections officials denied his filings.
Prior to ESSB 5096’s final adoption, Eyman had been attempting to convince potential funders and supporters to support an initiative to overturn the bill, rather than a referendum, characterizing the previous iteration of the bill (which did not prohibit a referendum) as “a trap” set by Democrats.
Though ESSB 5096 will not be subjected to a potential referendum, it will have to overcome legal challenges from several right wing groups. Those challenges will begin at the trial court level and almost certainly wind up in front of the Washington State Supreme Court within the next year and a half.
There could also be a ballot challenge in the form of an initiative, most likely in 2022, given that the window to qualify a measure to the November 2021 ballot is rapidly closing. (The signature deadline is in just two months.)
NPI’s research has found strong public support for a state capital gains tax on the wealthy for six years running. Our most recent finding is summarized below:
Capital gains tax poll finding (May of 2020)
QUESTION: Do you strongly support, somewhat support, somewhat oppose, or strongly oppose taxing the capital gains of wealthy individuals to help pay for public schools, colleges and universities?
- Support: 59%
- Strongly Support: 42%
- Somewhat Support: 17%
- Oppose: 32%
- Somewhat Oppose: 11%
- Strongly Oppose: 21%
- Not Sure: 9%
Note that more respondents said they strongly support a capital gains tax on the wealthy than the total number who said they were opposed.
We also found in that same survey about that an almost identical percentage of voters feel that schools in Washington are still underfunded, despite the Legislature’s work to respond to the Supreme Court’s McCleary decision. The implementation of ESSB 5096 will help address that funding need.
Our May 2020 survey of 1,070 likely 2020 Washington State voters was in the field from Tuesday, May 19th through Wednesday, May 20th, 2020.
It utilizes a blended methodology, with automated phone calls to landlines and text message answers from cell phone only respondents.
The poll was conducted by Public Policy Polling for the Northwest Progressive Institute, and has a margin of error of +/- 3.0% at the 95% confidence level.
NPI congratulates everyone who participated in the effort to secure the passage of ESSB 5096, especially the Democratic legislators who sponsored the bill, presided over its consideration in committee, and voted for it on the floor.
This is a great day for Washington State and the Pacific Northwest.